Despite all the disagreement in Washington, every proposal now before Congress to overhaul the nation’s health care system includes creation of an insurance “exchange” — a marketplace that would operate something like a Travelocity Web site for insurance policies.

In theory at least, the exchange would fix a fundamental flaw in the present system by giving small businesses and individuals a broad choice of insurance policies at competitive prices. Right now, such buyers typically have few affordable options.

The idea of an exchange has support from the White House and many in Congress — from people who also advocate including a government-run insurance plan in the marketplace and from those who oppose letting the government compete with commercial insurers.

But policy experts say few lawmakers have yet paid enough attention to what that new marketplace should look like — and whether it would actually work as promised.

Without careful design and adequate rules of fair play, and without letting enough buyers participate to create a robust market, the exchange might not actually stimulate new competition among the nation’s health insurers. In other words: What happens if you build an exchange and insurers do not flock to it with new, well-priced wares?

The risk is that many local markets could end up looking much as they do today — with small businesses and individuals at the mercy of too few insurers wielding too much power in their regions.

“We may not be able to improve competition in the short run through the exchange,” said Len Nichols, a health economist at the New America Foundation, a Washington research group that supports an overhaul of the insurance market.

So far, the House proposal calls for the creation of a national exchange where someone in Iowa, for example, may have the same choice of health plans as buyers in Maine and California. Because insurance is now a state-by-state patchwork, such an approach would conceivably enhance competition by creating an interstate market.

But critics worry that the result may be a few big providers of one-size-fits-all plans, still leaving many small businesses and consumers with products that do not meet their needs or budgets.

Both Senate proposals, meanwhile, favor the creation of state-based exchanges, where a state may have the choice of deciding whether its residents can also buy from a national or regional exchange. The exchanges may have other wide variations, depending on the model chosen by a state or outlined in the legislation.

Some may mirror the one in Massachusetts, which actively screens the policies and negotiates with insurers on behalf of customers. Others may operate more like electronic yellow pages, where insurers list their offerings with little government involvement or oversight.

Another big question is whether there will be enough new customers to prompt insurers to actively compete for their business.

As currently outlined in the Congressional proposals, participation in the exchanges would be limited in some way — to only the very smallest employers, or to residents of a single state or to people who do not now have coverage through their employers.

Another limiting factor, policy experts say, would be whether Congress provides generous enough subsidies so that people who do not currently have insurance could afford it.

For all their potential drawbacks, the exchanges are meant to address a fundamental issue: the current lack of competition in many parts of the country.

President Obama, for example, in his recent speech to Congress, cited states like Alabama where the insurance market for individuals and small companies is dominated by a handful of carriers. As a result, he said, “the price of insurance goes up and quality goes down.”

A recent analysis by the Government Accountability Office notes that in more than a dozen states, including Delaware, Maine, North Dakota and Rhode Island, the largest health insurer offering coverage for a small business commands more than half of the overall market.

Some insurers argue that the strongest need for competition is among the hospitals and doctors, not the health plans serving as middlemen.

“There has to be competition within the delivery system,” said David H. Klein, the chief executive of the powerful Excellus BlueCross BlueShield in Rochester, a nonprofit insurer that is one of the major sources of coverage in that market. “In most of America, that just isn’t going to happen.”

But small business owners frequently complain they when they have limited choice among insurers, they have little bargaining clout. “It’s a ‘take it or leave it’ for some of the biggest carriers out there,” said Amanda Austin, a lobbyist for the National Federation of Independent Business, which represents small businesses.

At Smithfield Diesel and Transmission Repair in Rhode Island, for example, for years the choice of insurers has been limited to the state’s two biggest carriers — a Blue Cross plan and United Healthcare — said Joan Frattarelli, who runs Smithfield Diesel with her husband. This year, the company’s costs went up by 29 percent, to about $34,000 for coverage of four employees under Blue Cross.

Ms. Frattarelli said she worried that some proposals in Congress would continue to restrict her options to only those plans now available in Rhode Island, which would leave her no better off. “Competition is the name of the game,” she said, “I don’t care what industry it is.”

The hope in Washington, of course, is that an influx of tens of millions of newly insured customers will lure insurance companies to enter new markets. That is what happened a few years ago when private insurers flocked to offer prescription drug coverage after it was added to the Medicare program, said Ken Sperling, a health care consultant for Hewitt Associates.

But because of the restrictions on who can shop, and the question of whether the shoppers will be able to afford insurance, no one knows how many new customers there might be, especially in some in the least populous markets.

The big national insurance companies, like Humana, United Healthcare and Aetna, would not speculate on how the exchanges might affect their business plans. But some of the regional insurers say they could be tempted to expand, at least into nearby markets or states.

“It’s not off the radar screen,” said George C. Halvorson, the chief executive of Kaiser Permanente, the big California health plan. “We’re going to sit down and take a really hard look.”

Another deterrent facing new entrants is the fact that established insurers can negotiate the deepest discounts with the local hospitals and doctors, making it hard for a new player to compete on price.

“The big dominant insurer in any market has the providers pretty much sewn up,” said Timothy S. Jost, a professor at Washington and Lee University. “I think that’s the big problem, and I don’t know that the legislation addresses that very well.”

Congress must also decide whether the exchanges would have any authority to decide which plans are offered and at what price, said Paul Fronstin, a policy analyst with the Employee Benefit Research Institute, a co-author of a recent report on insurance exchanges. “The exchange can have a more active role if it negotiate rates,” he said, “but it is not clear what is going to happen.”

In Massachusetts, for example, the state’s exchange, called the Connector, negotiates directly with the state’s private insurance companies in offering a small number of state-subsidized plans — similar to what an employer does when it screens the policies offered to its work force.

“We work as an aggressive employer, offering managed competition,” said Jon Kingsdale, the executive director of the Commonwealth Health Insurance Connector Authority. He said the agency’s ability to negotiate on behalf of 180,000 customers who required state subsidies was a reason it achieved a 6 percent reduction in the cost of premiums this year.

But the Connector would be less effective if it had no say over which plans were offered on the exchange, said Mr. Kingsdale, who criticized the Senate Finance committee’s proposal, for example, as potentially creating little more than “an automated yellow pages.”

Because formulating an effective exchange is so difficult, some policy analysts are still arguing that only a new government-run competitor could create a powerful enough force in many parts of the country to offset the home-court advantage many insurers already wield.

“People don’t realize how hard it is to crack these markets,” said David Balto, a former official with the Federal Trade Commission who is now a senior fellow at the Center for American Progress, a liberal research group. “What you need to have,” he said, “is something that effectively disrupts the market.”

A version of this article appears in print on October 6, 2009, on page B1 of the New York edition with the headline: Exchange, or Shortchange?. Order Reprints|Today's Paper|Subscribe